The New Rural Opportunity Zone Map

On this month’s live episode of OZ Office Hours, OpportunityZones.com founder Jimmy Atkinson discusses IRS Notice 2025-50, defining which Opportunity Zones qualify as rural. Effective July 4, 2025, rural OZs qualify for a reduced substantial improvement threshold. Plus, Jimmy answers live questions from the audience.

Join Jimmy the first Monday of every month at 3:00 PM Eastern Time, to get your Opportunity Zones questions answered live.

Featured On This Episode

About The Opportunity Zones Podcast

Hosted by OpportunityZones.com founder Jimmy Atkinson, The Opportunity Zones Podcast features guest interviews from fund managers, advisors, policymakers, tax professionals, and other foremost experts in the Opportunity Zones industry.

Listen Now

Episode Summary

The Opportunity Zone map received a major update last week with the release of IRS Notice 2025-50, which officially designates 3,309 Opportunity Zone census tracts as rural. In this October 2025 edition of Opportunity Zone Office Hours, Jimmy Atkinson explains the new classifications, demonstrates how to find rural zones on OpportunityZones.com’s updated map, and answers live audience questions about how these designations affect current and future OZ investments.

OZ Insiders Updates

Jimmy begins by highlighting recent and upcoming activities for members of OZ Insiders, his private mastermind group.

  • In September, the group gathered for a dinner in Fort Worth, Texas, at 97 West Kitchen and Bar in the Hotel Drover—an Opportunity Zone location in the historic Stockyards.
  • The next in-person dinner is scheduled for December 2 in Las Vegas, the evening before the Novogradac OZ Summit, likely at Mandalay Bay.
  • Monthly online Masterclasses continue as well: Ashley Tison of OZ Pros will teach the October 13 session on OZ 2.0 rural incentives, following a well-attended September session led by Todd Vitzthum of ACARA on the commercial real estate market. Members can learn more or join at OZInsiders.com.

IRS Notice 2025-50: The Rural Tract List

Jimmy reviews the details of IRS Notice 2025-50—the first formal IRS guidance since the One Big Beautiful Bill Act (OZ 2.0) became law on July 4, 2025. The notice defines “rural area” as any location outside a city or town with more than 50,000 inhabitants, and not adjacent to an urbanized area of that size. Based on this definition, the IRS published an appendix of 3,309 rural Opportunity Zone census tracts, listed alphabetically by state and county.

To make the data easier to visualize, OpportunityZones.com has updated its interactive map at OpportunityZones.com/map, marking rural tracts in orange and non-rural tracts in blue. Jimmy demonstrates how to use the map with examples from Los Angeles, Phoenix, and the Dallas–Fort Worth area, showing where urban centers remain non-rural while outlying tracts qualify as rural.

What the Update Does (and Doesn’t) Change

Jimmy emphasizes that this update applies only to the existing OZ 1.0 map.

  • No new tracts were added, and no boundaries were changed.
  • About 38% of current OZ tracts are now officially designated as rural.
  • The forthcoming OZ 2.0 map, which will take effect January 1, 2027, has yet to be created; states will begin selecting new tracts roughly a year from now.

New Rural Incentives Now in Effect

Jimmy clarifies that one key OZ 2.0 incentive is already active:

  • Reduced Substantial Improvement Requirement. For rural tracts, the threshold has been cut from 100% to 50%. That means if a property is purchased for $1 million, with $700,000 allocated to the building, the investor now needs only $350,000 of improvements—half the prior amount—to qualify.

This rule took effect July 4, 2025, the date OZ 2.0 was enacted. Investors holding existing buildings in any of the 3,309 rural tracts can immediately benefit. The second rural incentive—a 30% basis step-up after five years—will not begin until January 1, 2027.

Live Audience Q&A Highlights

During the live chat, viewers submitted a range of questions that Jimmy addressed in real time:

OZ vs. 1031 Exchange
Jimmy explains that while both programs allow capital-gain deferral, OZs accept gains from any asset class—not just real estate—and do not require a Qualified Intermediary or a 45-day identification window. Both share a 180-day reinvestment deadline, but otherwise operate very differently.

Immediate Eligibility for Rural Benefits
Several viewers asked whether rural incentives apply now or only under OZ 2.0. Jimmy reiterated that Congress made the 50% substantial improvement reduction effective upon enactment. Although he advises consulting tax counsel, he believes investors can start utilizing the rule today.

Scope of the IRS Update
Attorney Gerry Reihsen asked whether the 3,309 rural tracts identified by the IRS could also qualify for future OZ 2.0 designations. Jimmy clarified that the update applies solely to OZ 1.0 tracts; the IRS has not yet published the list of eligible tracts for OZ 2.0, which will likely arrive in early 2026.

Designation of “Qualified Rural Opportunity Funds” (QROFs)
Jimmy reviewed the new term from the statute—“Qualified Rural Opportunity Fund”—and noted uncertainty around how funds will elect this status, possibly through a new checkbox on IRS Form 8996. The Treasury Department has not yet provided implementation details.

Can the 2026 Gain Be Re-Deferred?
Chris raised a popular question: Can the deferred gain that becomes taxable on December 31, 2026 be rolled into a new OZ 2.0 fund? Jimmy said there’s no clear IRS guidance yet. While some practitioners see nothing explicitly prohibiting it, others—including tax advisor Blake Christian of HCVT—interpret regulations to mean a capital gain can be deferred into a QOF only once. The matter remains unresolved.

Purchase Timing for the 50% Rule
When asked whether the July 4 effective date applies to purchase contracts or improvement work, Jimmy acknowledged the ambiguity and urged investors to consult their legal advisors.

Legislative Reference Walk-Through

Jimmy then shares his redlined copy of IRC §1400Z-2, showing where the new language appears:

  • Basis Step-Up: increases basis by 10% after five years—or 30% for a Qualified Rural Opportunity Fund.
  • Substantial Improvement: now specifies a 50% threshold “in the case of property in a Qualified Opportunity Zone comprised entirely of a rural area.”
  • Effective Date: Most amendments apply to investments after December 31, 2026, but Congress explicitly made the 50% rule effective upon enactment, confirming immediate applicability.

Community Connections and Closing Notes

As the session wraps up, Jimmy notes the collaborative spirit among viewers, with participants like Gerry and Chris connecting on LinkedIn to continue their discussions. He reminds listeners that these monthly Office Hours are just a preview of what OZ Insiders offers through deeper strategy sessions, classes, and networking dinners.

Upcoming events include:

  • October 13: Masterclass on OZ 2.0 Rural Incentives with Ashley Tison (OZ Pros)
  • November 10: “Prepping QOFs for OZ 2.0” with Gerry Reihsen
  • December 2: Private Networking Dinner in Las Vegas, preceding the Novogradac OZ Summit
  • December Masterclass: How OZ Designations Are Determined and How to Advocate for Your Community

Jimmy closes by encouraging viewers to subscribe on YouTube and visit OpportunityZones.com/map to explore which tracts are now officially rural. He invites anyone serious about maximizing OZ 2.0 opportunities to learn more at OZInsiders.com.